Ethereum has undoubtedly been under pressure despite the recent bullish rally in the broader cryptocurrency market as it struggles to make any major moves.
A recent analysis by ShayanBTC, a contributor to the CryptoQuant QuickTake platform, shed light on key factors affecting Ethereum’s performance.
In a post titled “Ethereum Faces a Crossroads: Funding Ratings and $3K Support Key to High Momentum Support,” Shayan highlights the commodity’s struggle to maintain its upward trajectory.
Funding Rates and Importance of the $3K Support Level
According to Shayan, Ethereum’s bullish momentum has been largely challenged by fluctuations in Funding Rates, which are an important indicator of demand in the derivatives market.
Although these rates began to rise during the recent meeting in the crypto market, which shows growing confidence, there was a subsequent decline after Ethereum was rejected at the resistance level of $ 4,000 which suggests a reduced interest of the seller and commitment.
Notably, the rise in Funding Rates during the session reflected cautious optimism among traders. However, the sharp drop in these prices later highlights the declining demand for Ethereum in the derivatives market.
This change raises concerns about the sustainability of the bullish trend, especially due to the inability of Ethereum to break the $4,000 resistance.
The $3,000 support level has emerged as an important threshold for Ethereum. Shayan emphasized that maintaining this level is important to stabilize the market and the momentum can be controlled.
Failure to hold above $3,000 may result in increased selling pressure, leading to a deeper market correction. A commenter wrote:
Overall, the outlook for Ethereum hinges on re-seeking higher Funding Levels and protecting $3K. These factors will determine whether the market resumes its uptrend or faces further corrections.
Ethereum Market Performance
Meanwhile, Ethereum has continued to show downward movement, especially as the broader market has recently turned bearish. In the last week, the market value of Ethereum has decreased by 6.2% which brings its price below $3,500.
However, in the previous day, there was a slight increase in the price of ETH as the asset recorded a 0.9% increase. This small increase has pushed the price of ETH to over $3,200 at the time of writing which marks a 33.9% decline from its all-time high of $4,878 recorded in November 2021.
Interestingly, despite the decline in the price of ETH over the past week, the daily trading volume of the asset has faced the opposite trend during the same period. In particular, the daily trading volume of ETH went from $20 billion last Friday to now sitting at over $26 billion as of today.
Given the current trend in ETH, it is worth noting that this increase in trading volume may be the result of increased buying pressure and ongoing selling pressure in the Ethereum market.
Featured image created with DALL-E. Chart from TradingView